Chinese industrial incubator will cater to manufacturers

Industrial incubator situated just 45 minutes by train from Shanghai will give Israeli manufacturers “a competitive advantage."

map incubator_311 (photo credit: Courtesy)
map incubator_311
(photo credit: Courtesy)
A new industrial incubator situated just 45 minutes by train from Shanghai will give Israeli manufacturers “a competitive advantage,” one of the men behind its creation said Monday.
“Today, foreign companies must invest in local [Chinese] production in order to maintain their competitive advantage, but many Israeli companies are discouraged from doing so because of uncertainty over their sales success,” Zvi Shalgo, chairman of the Israeli Chamber of Commerce in Shanghai and founder and CEO of the PTL Group, said at the unveiling in Tel Aviv of the Changzhou Industrial Incubation Initiative.
The PTL Group, in partnership with another Israeli-controlled company, Elan Industries, founded the incubator on a 13,000-square-meter plot of land in the Wujin Economic Development Zone in the eastern province of Jiangsu.
The incubator, which will cater mainly to Israeli companies, will provide its tenants with local production and management support, Shalgo said, adding that it would take a cut from all sales made by companies using its facilities.
Six Israeli companies have already committed to opening production plants, beginning with Makhteshin Agan subsidiary Lycored, which will open its Changzhou operations in September, he said.
Lycored CFO Shai Givon said the dietary-supplements manufacturer had $90 million in sales in 2010 to large multinationals, including Kelloggs, Nestle and Herbalife, but understood that if it didn’t open a factory in China within a few years, “we would be out of the picture.”
“Today, if you want to work with powerful multinationals, they are not prepared to [work with you] if you have just one production plant,” he said.
“You need to have at least two production plants, and it is preferable that you have at least one in Southeast Asia, which is an expansion market for everybody.”
Givon said the NIS 100m. fund expected to be set aside for Israeli exporters by the Industry, Trade and Labor Ministry pales in comparison to the $150m. capital fund that was recently established by the Changzhou local government – “just one city” – to encourage foreign investment.
“The bottom line for Israeli businesspeople,” he said, “is to get over there, to get to know people, to find the location, to benefit from the assistance of those who have a lot of money – and not to wait here for government supply.”
Wujin Economic Development Zone chairman Lu Qiuming and deputy director of investment Zhao Dongliang also attended the press conference. They said more than 80,000 companies have offices in Changzhou, including 6,780 that are foreign firms and 44 that are listed in the Fortune 500.
Dongliang played down the problem of labor shortages. While reports about a lack of manpower in China were true, he said, Changzhou has not been affected.